BOJ ready to act boldly to support economy: deputy governor
By Leika Kihara
TOKYO (Reuters) - The Bank of Japan will act boldly and flexibly when necessary to support the economy, its deputy governor said, signaling readiness to expand stimulus even after last week's monetary easing as the pain from China's slowdown and Europe's debt crisis persist.
The central bank eased policy last week by boosting bond purchases because manufacturing activity in many countries had weakened more than expected, hitting Japanese exports and factory output, BOJ Deputy Governor Hirohide Yamaguchi said.
"We've judged that the economy was undershooting our expectations. If so, there was no reason to delay taking policy action," he told a forum on Monday.
Yamaguchi said that even after last week's monetary easing, the BOJ was ready to take further action if risks to the economy grow, including from yen rises that hurt exports.
"As have been the case up till now, we'll take bold and flexible action when necessary, while scrutinizing the outlook for the economy and prices as well as risks," he said.
Japan's economy has outpaced growth of other G7 nations in the first half of this year with support from robust private consumption and spending for rebuilding from last year's earthquake.
But a recent slew of weak data, including a slump in exports and output, has cast doubt on the BOJ's forecast that Japan's economy is headed for a moderate recovery.
Yamaguchi said Japan's economic recovery will be delayed by about six months due to the prolonged slowdown in Chinese growth and the widening fallout from Europe's debt crisis, repeating a forecast made by Governor Masaaki Shirakawa last week. Continued...